Stagnation, Inflation, and Crisis, 1981-94

The effect of the 1974-85 period's industrialization on the balance
of trade was significant. The balance of trade moved from an average
deficit of US$3.4 billion in the 1974-76 period to an average surplus of
US$10.7 billion in the 1983-85 period. In 1985 the share of manufactures
(processed and semiprocessed) of total exports reached 66 percent, and
between 1971-75 and 1978-83 the share of basic input imports in total
imports declined from 32.3 percent to 19.2 percent. The recession and
stagnation of the early 1980s had a role in reducing imports. However,
import substitution was also important, as demonstrated by the few years
of the 1980s that experienced a significant growth in GDP while the
trade surplus was maintained.

Between 1981 and 1992, the GDP increased at an average annual rate of
only 1.4 percent and per capita income declined 6 percent. Gross
investment, as a proportion of GDP, fell from 21 to 16 percent, in part
as a result of the fiscal crisis and the loss of public-sector
investment capacity. The decline also reflected growing uncertainties
regarding the future of the economy. The 1980s became known as the
"lost decade," and its problems spilled over into the 1990s.
Despite the stagnation of the 1981-92 period, inflation remained a major
problem. It sometimes reached very high rates, prompting the
implementation of short-lived shock-stabilization programs.